HomeMy WebLinkAbout08-005 CoreyOPINION OF THE COMMISSION
Before: Louis W. Fryman, Chair
John J. Bolger, Vice Chair
Donald M. McCurdy
Paul M. Henry
Raquel K. Bergen
Nicholas A. Colafella
DATE DECIDED: 7/21/08
DATE MAILED: 8/5/08
08 -005
Rodney A. Corey, Esquire
Deputy Chief Counsel
Majority Chief Counsel's Office
Commonwealth of Pennsylvania
House of Representatives
Suite B -6 Main Capitol
P.O. Box 202228
Harrisburg, PA 17120 -2228
Dear Mr. Corey:
This Opinion is issued in response to your advisory request letter of June 4, 2008,
and your faxed transmission of June 5, 2008.
I. ISSUE:
Whether, pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S. § 1101 et seq., a Member of the Pennsylvania House of Representatives would be
required to disclose, as gifts on his Statement(s) of Financial Interests, contributions to or
disbursements from a trust for which the Member's minor child would be the named
beneficiary, where such contributions /disbursements would assist with medical and
incidental expenses, including expenses for mileage, food and lodging for family members
to be present for treatments at distant medical facilities, and if so:
(1) Whether a particular contribution, or a disbursement resulting from
that contribution, would have to be reported when the contribution
would be valued at less than $250;
(2) Whether a particular contribution by a family member or non - lobbyist
friend, or a disbursement resulting from such a contribution, would
have to be reported under circumstances where the motivation for the
contribution clearly would be the family or personal relationship;
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August 5, 2008
Page 2
(3)
Whether the date on which such a gift would be realized would be the
date of contribution to the trust or disbursement from the trust;
(4) Whether gifts would be attributed to donors on a first -in, first out basis
or a different method of tracking donors, if the duty to disclose would
be based upon disbursements; and
Whether disbursements from the trust to other family members, to
reimburse money they expended for medical and incidental expenses
related to hospitalization and treatment for the Member's child, would
constitute reportable gifts to the Member.
(5)
II. FACTUAL BASIS FOR DETERMINATION:
As Deputy Chief Counsel within the Majority Chief Counsel's Office of the
Pennsylvania House of Representatives (hereinafter also referred to as the "House of
Representatives" or "House "), you have been authorized by a Member of the House
Republican Caucus ( "Member ") to request an advisory from this Commission based upon
the following submitted facts.
The Member's minor child is currently undergoing hospitalization and treatment for
a serious medical condition. Friends of the Member wish to establish a trust in the
Member's child's name in order to assist with the significant medical and incidental
expenses associated with the child's hospitalization and treatment. Incidental expenses
would include reimbursement for mileage expenses and food and lodging so that family
members could be present for and assist with treatments at distant medical facilities.
The trust would be established with the Member's child as the named beneficiary.
The trust would not be a blind trust, as the Member and his family would be aware of the
names of the donors. You state that it is contemplated that once the Member's child's
hospitalization and treatment has been successful, any funds remaining in the trust would
be donated to a local hospital or other charitable interest related to the medical condition
of the Member's child.
You ask whether contributions to or disbursements from the trust in calendar year
2008 would be considered gifts to the Member such that the Member would be required to
disclose such gifts on his Statement of Financial Interests filed by May 1, 2009, for
calendar year 2008, and if so:
(1) Whether a particular contribution, or a disbursement resulting from
that contribution, would have to be reported when the contribution
would be valued at less than $250;
(2) Whether a particular contribution by a family member or non - lobbyist
friend, or a disbursement resulting from such a contribution, would
have to be reported under circumstances where the motivation for the
contribution clearly would be the family or personal relationship;
(3) Whether the date on which such a gift would be realized would be the
date of contribution to the trust or disbursement from the trust;
(4) Whether gifts would be attributed to donors on a first -in, first out basis
or a different method of tracking donors, if the duty to disclose would
be based upon disbursements; and
(5) Whether disbursements from the trust to other family members, to
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August 5, 2008
Page 3
65 Pa.C.S. § 1105(b)(6).
reimburse money they expended for medical and incidental expenses
related to hospitalization and treatment for the Member's child, would
constitute reportable gifts to the Member.
By letter dated June 6, 2008, you were notified of the date, time and location of the
public meeting at which your request would be considered.
At the public meeting on July 21, 2008, you appeared and offered commentary that
may be fairly summarized as follows. The trust has not yet been established, but some
monies have already been donated and provided to the bank that will hold the res of the
trust. The trustees will be one employee of the bank and another individual who is a friend
of the Member. To your knowledge, no registered lobbyists have had any involvement with
the proposed trust.
III. DISCUSSION:
It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics
Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the
facts that the requester has submitted. In issuing the advisory based upon the facts that
the requester has submitted, this Commission does not engage in an independent
investigation of the facts, nor does it speculate as to facts that have not been submitted. It
is the burden of the requester to truthfully disclose all of the material facts relevant to the
inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent
the requester has truthfully disclosed all of the material facts.
A Member of the Pennsylvania House of Representatives is a public official subject
to the provisions of the Ethics Act and specifically the financial disclosure requirements of
Sections 1104 and 1105 of the Ethics Act. See, e.q., Boback, Opinion 08 -002; Feese,
Opinion 07 -015.
Section 1104(a) of the Ethics Act provides that each public official /public employee
must file a Statement of Financial Interests for the preceding calendar year, each year that
he holds the position and the year after he leaves it.
Section 1105(b)(6) of the Ethics Act provides as follows:
§ 1105. Statement of financial interests
(b) Required information. - -The statement shall include
the following information for the prior calendar year with
regard to the person required to file the statement:
(6) The name and address of the source and the
amount of any gift or gifts valued in the
aggregate at $250 or more and the
circumstances of each gift. This paragraph shall
not apply to a gift or gifts received from a
spouse, parent, parent by marriage, sibling,
child, grandchild, other family member or friend
when the circumstances make it clear that the
motivation for the action was a personal or family
relationship. However, for the purposes of this
paragraph, the term "friend" shall not include a
registered lobbyist or an employee of a
registered lobbyist.
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August 5, 2008
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The Ethics Act defines the term "gift" as the term is defined in Section 13A03 of
Pennsylvania's lobbying disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. § 13A03
(see, 65 Pa.C.S. § 1102):
§ 13A03. Definitions.
"Gift." Anything which is received without consideration
of equal or greater value. The term shall not include a political
contribution otherwise reportable as required by law or a
commercially reasonable loan made in the ordinary course of
business. The term shall not include hospitality, transportation
or lodging.
65 Pa.C.S. § 13A03.
The Ethics Act defines the terms "source," "person," and "business" as follows:
§ 1102. Definitions
"Source." Any person who is a provider of an item
reportable under section 1105 (relating to statement of
financial interests).
"Person." A business, governmental body, individual,
corporation, union, association, firm, partnership, committee,
club or other organization or group of persons.
"Business." Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self - employed individual, holding company, joint
stock company, receivership, trust or any legal entity
organized for profit.
65 Pa.C.S. § 1102 (Emphasis added).
We begin our analysis by reviewing our decision in Cooper, Opinion 92 -009.
In Cooper, Opinion 92 -009, this Commission considered whether the Ethics Act
would impose any prohibitions or restrictions upon a public official /public employee who
was the beneficiary of a blind trust established to pay the public official's /public employee's
living expenses and uncovered medical expenses, when some of the anonymous donors to
the blind trust would be vendors conducting business with the municipality in which the
public official /public employee served.
We first determined that the receipt of funds from the blind trust would constitute a
gift to the public official /public employee under the Ethics Act. We further determined that
the public official /public employee would be required to disclose such gifts on his
Statements of Financial Interests. Specifically, we held that the public official /public
employee would be required to identify the blind trust itself as the source of the gift, while
listing the address of the depository institution holding the res of the trust and the amount
of the gifts received in the calendar year. Because the blind trust preserved the anonymity
of the donors, we concluded that the public official /public employee, in his official capacity,
would not have a conflict of interest as to such donors as long as:
(1) There would be no improper understandings as prohibited by
Sections 3(b) and 3(c) of the Ethics Law (now Sections 1103(b) and
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August 5, 2008
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1103(c) of the Ethics Act, 65 Pa.C.S. §§ 1103(b), (c));
(2) The public official /public employee would not use the status or
position of his public office to encourage any particular vendor to
contribute to the blind trust; and
(3) The anonymity status of the donors would continue.
We noted that if the public official /public employee would become aware of the
identity of a donor to the blind trust, and such donor would have contracts or other matters
pending before the governmental body that the public official /public employee served, the
public official /public employee should seek additional guidance from this Commission as to
whether a conflict would exist under the applicable circumstances.
In the instant matter, the Member's minor child would be the named beneficiary of
the trust. However, disbursements from the trust would be used to pay the medical
expenses of the Member's minor child and other expenses for which the Member would
have legal responsibility.
You are advised that disbursements from the trust to the Member as well as
disbursements from the trust to pay the medical expenses of the Member's minor child and
other expenses for which the Member would have legal responsibility would generally
constitute gifts to the Member.
Under the submitted facts, the source of such gifts would be the trust itself, not the
donors who contributed to the trust. The Ethics Act defines the term "source" as "[a]ny
person who is a provider of an item reportable under section 1105" of the Ethics Act. The
term "person" is defined to include, inter alia, a "business," and the term "business" is
defined to include a trust. 65 Pa.C.S. § 1102. The trust itself would be the provider and
therefore the "source" of disbursements from the minor child's trust. Cf., Cooper, supra;
Feese, Opinion 07 -015 (Where a coalition provided a reportable gift to a House Member,
the coalition itself was the source of the gift rather than the individual coalition members
who made contributions to the coalition toward the cost of the gift).
To the extent the trust would make disbursements for meals, beverages,
transportation or lodging expenses for which the Member would have legal responsibility,
those particular disbursements would not constitute "gifts." This is because the definition
of "gift" set forth above excludes hospitality, transportation, and lodging. See, 65 Pa.C.S.
§ 1102; 65 Pa.C.S. § 13A03. Additionally, under the unique factual circumstances that you
have submitted, such disbursements from the trust itself would not constitute
"transportation and lodging or hospitality received in connection with public office or
employment" subject to disclosure pursuant to Section 1105(b)(7) of the Ethics Act,
because disbursements from the trust would not be received in connection with the
Member's public office or employment.
We shall now consider the specific questions that you have posed.
In response to the first four specific questions listed above, you are further advised
as follows. Contributions to the minor child's trust would not be subject to disclosure by
the Member. The source of disbursements from the trust would be the trust itself, not the
donors, and therefore it would make no difference whether a donor contributing to the trust
would be a family member or non - lobbyist friend. If the disbursements from the trust that
would be provided to the Member or that would be used to pay expenses for which the
Member could have legal responsibility would be valued in the aggregate at $250 or more
for a given calendar year, then the Member would be required to disclose such gifts on his
Statement(s) of Financial Interests, identifying the trust itself as the source of the gift(s)
and listing the address of the depository institution holding the res of the trust and the
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August 5, 2008
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amount of the gift(s) received in the calendar year. Cooper, supra. The date of a given
disbursement would be the date that particular gift would be deemed to have been
received by the Member.
In response to the fifth specific question listed above, you are advised that
disbursements from the trust to other family members to reimburse payments made for
expenses for which the Member has had legal responsibility would constitute reportable
gifts to the Member. By reimbursing the family member for such an expense, the trust
would replace the family member as the source of the gift. To hold otherwise would enable
a filer to avoid disclosure by having a family member or non - lobbyist friend initially provide
a gift and then receive reimbursement for it. This is not to suggest that such would occur
as to the Member, but merely to provide a complete response to your inquiry.
Finally, we note that this advisory Opinion does not address potential conflicts of
interest in matters involving donors /donations to the trust.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act.
IV. CONCLUSION:
The Member of the Pennsylvania House of Representatives ( "Member ") who is the
subject of this advisory Opinion is a public official subject to the provisions of the Public
Official and Employee Ethics Act, 65 Pa.C.S. § 1101 et seq. ( "Ethics Act "), including the
requirements for filing Statements of Financial Interests. Under the submitted facts that:
(1) the minor child of the Member is currently undergoing hospitalization and treatment for
a serious medical condition; (2) friends of the Member wish to establish a trust in the
Member's child's name in order to assist with the medical and incidental expenses
associated with the child's hospitalization and treatment; (3) incidental expenses would
include reimbursement for mileage expenses and food and lodging for family members to
be present for and assist with treatments at distant medical facilities; (4) the Member's
child would be the named beneficiary of the trust; (5) the trustees would be one employee
of the bank that will hold the res of the trust and another individual who is a friend of the
Member; (6) it is contemplated that once the Member's child's hospitalization and
treatment has been successful, any funds remaining in the trust would be donated to a
local hospital or other charitable interest; and (7) the trust would not be a blind trust, but
rather, the Member and his family would be aware of the names of the donors, you are
advised as follows.
Contributions to the minor child's trust would not be subject to disclosure by the
Member. Disbursements from the trust to the Member as well as disbursements from the
trust to pay the medical expenses of the Member's minor child and other expenses for
which the Member would have legal responsibility would generally constitute gifts to the
Member. The source of such gifts would be the trust itself, not the donors who contributed
to the trust. If the disbursements from the trust that would be provided to the Member or
that would be used to pay expenses for which the Member could have legal responsibility
would be valued in the aggregate at $250 or more for a given calendar year, then the
Member would be required to disclose such gifts on his Statement(s) of Financial Interests,
identifying the trust itself as the source of the gift(s) and listing the address of the
depository institution holding the res of the trust and the amount of the gift(s) received in
the calendar year. The date of a given disbursement would be the date that particular gift
would be deemed to have been received by the Member. Disbursements from the trust for
meals, beverages, transportation or lodging expenses would not constitute "gifts" or
"transportation and lodging or hospitality received in connection with public office or
employment." Disbursements from the trust to other family members to reimburse
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August 5, 2008
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payments made for expenses for which the Member has had legal responsibility would
constitute reportable gifts to the Member. This advisory Opinion does not address
potential conflicts of interest in matters involving donors /donations to the trust.
Act.
The propriety of the proposed conduct has only been addressed under the Ethics
Pursuant to Section 1107(10) of the Ethics Act, the person who acts in good faith on
this Opinion issued to him shall not be subject to criminal or civil penalties for so acting
provided the material facts are as stated in the request.
This letter is a public record and will be made available as such.
Finally, a party may request the Commission to reconsider its Opinion. The
reconsideration request must be received at this Commission within thirty days of the
mailing date of this Opinion. The party requesting reconsideration must include a detailed
explanation of the reasons as to why reconsideration should be granted in conformity with
51 Pa. Code § 21.29(b).
By the Commission,
Louis W. Fryman
Chair